Women face long-term care price hikes

By Elizabeth O'Brien

The long-term care insurance industry has been undergoing some significant changes, many of them not so friendly to consumers. But for women who decide they need the coverage, one thing is certain: The window is rapidly closing for those who hope to buy individual long-term care insurance policies at the same price as men.

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On prices, her bad news is worse than his.

Two major carriers in the industry have begun rolling out policies with rates at least 40% higher for individual female policies than for individual male policies; other companies are expected to follow suit within months. The changes, which reflect the reality that women live longer and file more claims than men, complicate an already confusing market that’s diminished in recent years as carriers have exited the business.

Genworth, the biggest writer of long-term care insurance policies, and rival John Hancock have both introduced gender pricing across many states. As the new policies hit the market, they replace the prior policies that offered unisex pricing. Single women won’t be the only ones affected by the change; a married woman who doesn’t apply with her husband—say, because the husband is too ill to pass medical underwriting—will also be charged more.

The increases are substantial: Premium rates for a woman buying an individual policy with 3% annual compound inflation growth are now 42% to 63% higher than a comparable policy for a male, according to an analysis of Genworth and John Hancock policies done in May by the American Association for Long-Term Care Insurance. The average annual premiums for a 55-year-old female for a policy worth $164,000 over 3 years, including a 3% compound inflation growth option, are now $2,700 per year, versus $1,850 for a man the same age, according to the association. While consumers in recent years have faced premium hikes in many long-term care insurance policies, buyers of these new policies will likely see more price stability, experts say, as the industry has largely corrected for the miscalculations behind the increases.

Genworth’s new gender-priced product is available in more than 30 states, and John Hancock’s in at least 42. Experts expect these products—as well as new ones issued by competitors—to spread to more states as insurance commissions give their approval. (Two states, Montana and Colorado, require unisex rates.) Women who decide they need individual policies should make a purchase as soon as possible, experts advise. “It might not be right for you at the end of the day,” said Aaron Skloff, a financial adviser in Berkeley Heights, N.J., who sells long-term care policies, “But if it is, know you’ll be paying at least 40% more for it.”

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Encore looks at the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities, needs and priorities of people saving for and living in retirement. Our lead blogger is editor Matthew Heimer, and frequent contributors include editor Amy Hoak, writer Catey Hill, and MarketWatch columnists Elizabeth O’Brien, Robert Powell and Andrea Coombes. Encore also features regular commentary from The Wall Street Journal retirement columnists Glenn Ruffenach and Anne Tergesen and the Director of the Center for Retirement Research at Boston College, Alicia H. Munnell.